Why Managers Hold Shares of Their Firms: An Empirical Analysis

Table 6: Impact of CEO Discretion

This table describes estimation results of the four-factor model Model (1)
as described in the main text for value-weighted managerial ownership
portfolios. Portfolios are constructed based on characteristics that proxy
for managerial discretion and on the fraction of the firm’s outstanding
shares owned by the officer with the highest managerial ownership. In the
first row, results using all firms are repeated for easy comparison. In the
second and third rows, selection is based on firms from the industries in
which CEO impact on firm value (Tobin’s Q) and performance (return on
assets, ROA), respectively, as reported in Wasserman, Nohria, and Anand
(2001), is above the median. In the fourth row, firms with above median
sales growth in the past five years are included. In the fifth row, only
firms in which CEO tenure at the respective firm is above the median are
included. In the last row, firms whose age in the respective month is below
the median of all firms are included. The cutoff for managerial ownership
of the respective portfolio is based on the Execucomp data-item Shrownpc
and is given in the first row. Stocks are selected from the S&P 1500
universe. Alphas are on a monthly basis. Standard errors are in parentheses.
The number of months used to estimate the model is always 120. ***, **,
and * indicate significance at the one, five, and ten percent level, respectively.

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